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from Breakingviews:

No-debt mania continues to dictate German policies

By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Angela Merkel’s rhetoric on higher public investment is changing for the better. But the German chancellor remains unruffled by growing calls from her euro partners and the European Central Bank to change tack on fiscal policy. Germany’s excessive focus on balanced budgets remains unchanged and is likely to prevent any swift and significant increase in public infrastructure spending.

This fixation on a supposedly “sound” fiscal policy is misguided and harmful. Real interest rates are at historical lows. A decade of public thrift has created a large backlog of infrastructure investment. Private sector investment has also been subpar for years. Markedly higher public spending on roads, schools and universities would not only benefit Germany itself. It would also help bring a welcome economic relief to the euro zone, which is flirting with stagnation.

Under pressure from her centre-left coalition partner, G7 countries and European peers, Merkel has at least started to acknowledge the issue. Vice Chancellor Sigmar Gabriel, the SPD’s party boss, recently tasked a high-profile advisory commission with finding ways to end the investment drought.

from MacroScope:

Swedish shift

Opposition leader Stefan Lofven speaks at the election night party of the Social Democrats in Stockholm

Sweden's centre-left Social Democrats topped the poll in Sunday’s election but fell well short of an overall majority to the extent that it will struggle to form a strong coalition.

The Social Democrats and the Greens and hard Left, who would be natural coalition allies, garnered 43.7 percent of the vote. The anti-immigrant far right emerged as the third biggest party to hold the balance of power with nearly 13 percent.

from MacroScope:

An almighty gamble

Britain's Prime Minister David Cameron leaves Downing Street in London

Having woken up to the very real possibility of Scotland going it alone, the leaders of Britain’s main parties have scrapped their parliamentary business and headed north to campaign in what amounts to a huge gamble.

The “No” campaign has been criticized for many things – being too negative (though no is negative by definition), being too aloof, failing to address the hole’s in Alex Salmond’s manifesto. The question is whether it is too late to do anything about it. It is risky to deploy Prime Minister David Cameron who, by his own admission, is not catnip to the Scots.

from MacroScope:

Nearer the brink

A man walks past cutting boards, that have been painted with images of Russia's President Vladimir Putin, at a street store in the center of St. Petersburg

Ukraine is nearer the brink with Russian forces now pretty clearly operating over the border. The past week has seen Ukrainian forces flee in the path of a new rebel advance which Kiev and its western allies says has been directly aided by Moscow's forces.

Russian President Vladimir Putin called on Sunday for immediate talks on "statehood" for southern and eastern Ukraine, though his spokesman tried to temper those remarks, that following an aggressive public showing in which Putin compared the Kiev government to Nazis and warned the West not to "mess with us".

from John Lloyd:

Germany’s renewed hegemony isn’t something Europe needs to fear

German Chancellor Merkel attends news conference in Berlin

She can’t help it. Angela Merkel, chancellor of Germany, is the most important leader in Europe. She tries to duck it by exhibiting a modest demeanor, presenting no charisma, no grand pronouncements, no apparent ambition to stamp her views on history. She just carries on.

Yet European leaders vie for her Mona Lisa smile (or is it a smile?). Are we comfortable with Merkel’s influence and power?

from The Great Debate:

Putin’s anti-American rhetoric now persuades his harshest critics

People I know in Russia, members of the intelligentsia and professionals who have long been critical of President Vladimir Putin’s anti-Western stance, have suddenly turned into America-bashers. Many have been swept away by Putin’s arguments that the United States, not the Kremlin, is destabilizing Ukraine.

Since the current crisis broke in Ukraine over its efforts to side with the European Union rather than Russia, Putin has been at war with the United States. He seems intent on proving that a U.S.-centric world order is over and that Europe should decide on its own what its relations with Russia will be.

from MacroScope:

A turning point?

Emergencies Ministry members work at the site of a Malaysia Airlines Boeing 777 plane crash in the settlement of Grabovo in the Donetsk region

Could the shooting down of a Malaysia Airlines plane over Ukraine be a fundamental turning point in the crisis that has pitted Russia against the West? And if so which way – towards rapprochement or a further escalation?

Kiev accused militants fighting to unite eastern Ukraine with Russia of shooting down the Boeing 777 carrying nearly 300 people from Amsterdam to Kuala Lumpur with a Soviet-era ground-to-air missile. Leaders of rebels in the Donetsk People's Republic denied any involvement, although around the same time their military commander said his forces had downed a smaller Ukrainian transport plane.

from Ian Bremmer:

World Cup chants reveal true state of U.S.-German relations

 Germany's national soccer players acknowledge their fans after their win over the U.S. at the end of their 2014 World Cup Group G soccer match at the Pernambuco arena in Recife

As Germany basks in its World Cup victory, it’s easy to forget that one of the most telling geopolitical moments of the tournament came during the Germany-U.S. game. As American fans chanted “U-S-A! U-S-A! U-S-A!” the Germans countered with, “N-S-A! N-S-A! N-S-A!”

In the weeks since, relations have crumbled. After it learned that a German intelligence officer allegedly spied for the United States, Germany expelled the CIA station chief in Berlin -- a rare move by a close American ally.

from The Great Debate:

U.S. spying on Germany: Making enemies out of allies, and for what?

German Chancellor Merkel attends a session of Bundestag in Berlin

What were they thinking?

In the wake of last fall's revelation that the National Security Agency had wiretapped German Chancellor Angela Merkel's cell phone, the report of U.S. intelligence’s involvement in two other likely cases of spying on Germany is mind-boggling.

Now the story has taken a dramatic new turn, with Germany expelling the CIA chief of station in Berlin -- an almost unprecedented step by an ally. This unusual action reflects how seriously the Merkel government takes these spying allegations.

from MacroScope:

Balance tilted in Ukraine?

slaviansk.jpgUkrainian forces pushed pro-Russian rebels out of their stronghold of Slaviansk on Saturday. Its re-capture represents Kiev's most notable military victory in three months of fighting in which more than 200 Ukrainian troops have been killed as well as hundreds of civilians and rebels.

The regions of Donetsk and Luhansk are likely to be next in the government forces’ crosshairs.

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